Below are the steps to solve the issue above.
1. In Microsoft Edge on the affected iPad device, go to the edge://signin-internals page.
2. Close the other Microsoft apps on the device to make sure they don't write anything to the account/token cache while you are cleaning it.
3. Click "Remove all accounts" at the bottom of the page.
4. Make sure there is no error message, i.e., the operation has been completed.
5. Restart the Microsoft app and sign out/sign into it. Now you were able to sign in without any issues.
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